Devolution in England
Debate between Clive Betts and George Hollingbery
Mr Betts
That has been true so far, but the positions in Scotland and in Wales are going to change. They will have more tax-raising powers and will be held to account. Otherwise, we will have a body that simply spends and gives out the largess, but is not held accountable for raising the money in the first place.
The Committee tried to deal with some difficult issues. We recognise that we may not have got absolutely all the details right. We felt, on balance, that there was a very clear case that devolution would encourage greater growth, particularly in cities. That applies to counties as well, but there are very clear figures for cities. Unlike other countries where the GVA of their major cities tends to be above the national average, with the exception of London and Bristol, the GVAs of the major cities in this country are actually below the national average. There is a fundamental problem there. Devolution does not necessarily guarantee more growth, but it removes some of the current restrictions on decisions being taken at a local level that can make growth take place.
George Hollingbery (Meon Valley) (Con)
I am grateful to the Chair of the Select Committee with whom I served for some time, although I did not take part in this report. One problem of devolution as he describes it, particularly on the issue of GVA in cities, is potentially the buoyancy and predictability of taxation and revenues. I would have thought that if this was done too rapidly and without some sort of mechanism from central Government to iron out fluctuations, there could be some very severe problems.
Mr Betts
I was going to come on to equalisation. Some areas have a greater ability to create and get the benefits of growth than others. This was a difficult issue, and we looked at it. I see the former Minister the hon. Member for Bromley and Chislehurst (Robert Neill) in his place. We thought that what had been done with the business rate retention scheme, or at least the partial retention scheme, was actually quite a good model: a starting point where a certain amount of tax is collected and transferred to a local authority in exchange for the grant that is currently given. The extra receipts that come in through growth would be kept in that area. Some receipts might in future be disproportionate, perhaps because of a very large increase in rateable values that are not directly linked to the efforts of an authority, so there should be a resetting arrangement every so often to take account of that.
We thought that was quite a careful way of doing it. We have probably gone further, in that we recommend that the totality of business rates be kept at local level and there should be a right within a group of authorities, a combined authority or the Greater London authority to set business rates as well—and obviously the element of any increase in the business rate level should not be taken back by central Government. It is a complicated issue, but we thought that the Government had basically got it right in their business rate retention scheme, which could be used as a model for the totality of business rates, or for stamp duty or capital gains tax, bearing in mind the fact that stamp duty is much more a London issue and therefore slightly more complicated. We recommend the idea in principle, but we recognise that it needs to be looked at in the way the hon. Member for Bromley and Chislehurst mentioned.
We tried to deal with equalisation. We suggested that an independent body be set up to deal with problems of resetting and other issues where there might be a conflict between central and local government. The Government dismissed that and thought that they could do all those things. We thought it would probably be useful to have a body like the Office for Budget Responsibility in the local government sphere.
In principle, we are recommending that a framework be set out for how more powers could be devolved, with local authorities setting out their governance arrangements, how they will be fiscally responsible and the sort of strategy they have for using any powers that are devolved to them. We recognised that progress would probably be made more quickly in some areas than in others and that initially the GLA and the combined authorities would probably be best placed to take on those powers. We see them very quickly taking on place-based budgets, strategic planning and housing, and the sorts of health arrangements proposed for Greater Manchester—I will be careful to go back to that with my hon. Friend the Member for Wigan (Lisa Nandy) present. Indeed, the Government intend to introduce primary legislation to allow those sorts of powers to be taken by the combined authorities. We also recommended the devolution of 100% of business rates, setting the multiplier on business rates, stamp duty and capital gains tax, and flexibility with council tax bands as well.
Although all local authorities could go there, we thought there were some changes that could immediately be made to the powers available to all local authorities, including the complete freedom to set council tax. It is quite staggering that the one tax that local authorities have got—the one that is supposedly theirs—is one for which any increase by more than the Secretary of State thinks is appropriate has to be put to a referendum. There is no other tax in this country for which we have to have a referendum to increase it. Those sorts of freedoms could be given straight away. We thought there could be further freedoms by pushing the commissioning of the Work programme down to all local authorities and that controls over fees and charges could be freed up. Why should the Secretary of State fix fees and charges? They should be fixed at a more local level.
New Housing Supply
Debate between Clive Betts and George Hollingbery
Mr Betts
I am sure that the Minister will have a response on when the guarantee will get the shovels digging. The idea of a guarantee is not a bad one if it works, but perhaps it should be linked to some wider proposal for an investment bank. Something that came out in our recommendations is that, if there is a limited amount of public money, it can sometimes work for the best by assisting to leverage in private funding and by providing some guarantee for that private funding. We can then make the most of the two sources of funding together.
George Hollingbery
Will the hon. Gentleman develop some thoughts on how the enormous social housing assets on the books of housing associations might be leveraged? Perhaps he will reflect for a moment on the potential difficulties of governance structures and on having hybrid public-private bodies that would guarantee the public role of housing associations but allow access to private capital.
Mr Betts
On the second point, I can see the problems. I do not think that we went into that issue in detail. I have been involved in such bodies in the past, and the important thing is to recognise that, yes, there can be issues and to try to resolve them right at the beginning. I will say a little more about housing associations in a second if the hon. Gentleman will allow me.
We looked at real estate investment trusts, which are close to the Minister’s heart—or perhaps not quite so close. We wondered why, after years of having them, no one seemed to be using them, certainly not for housing purposes. We had some challenges about how the Treasury treats investment and trading profits for tax purposes and whether that could be changed. It appears that the Government have gone a bit cold on REITs and do not see them as a solution, but I am sure that we will hear more from the Minister.
On social housing, there was a recognition—we might have different views about its appropriateness—that the Government had cut social housing funding over the comprehensive spending review period by 60%. Effectively, the Government are relying on housing associations in particular to increase rents towards 80% of market values on new properties and perhaps on existing properties to help to fund their balance sheets. Rents are rising to take up the slack from the reduced social housing grant that is available.
The National Housing Federation and housing associations told us clearly that they were concerned that this model would not last much beyond 2015. They did not think that was workable in the long term. They asked for some certainty about what would happen, so that they could enter into borrowing arrangements. The Minister for Housing told us in his response that he accepted that point and that the Government would look at it closely. It would be helpful to know what the Government’s response is now, because it is clearly an issue.
Moody’s has downgraded the credit ratings of 26 housing associations, and we are getting to the tricky issue of direct payments, which the Select Committee considered. The National Housing Federation certainly told us that it thought that a number of associations would end up paying more in borrowing costs because of the associated problem of rising arrears. We welcome the Government’s commitment to the pilots, which are going ahead, and we have had further information during our more recent inquiry into the impact of welfare reform on local authorities. We will reach some further conclusions about the direct payment issue. Clearly, the Government must be aware of the impact on housing associations.
Returning to the point the hon. Member for Meon Valley (George Hollingbery) raised a few moments ago, the Committee recognised that there are a number of ways to get more leverage from housing association assets, and people gave evidence on what they were doing in that regard. It is interesting that only yesterday the G15, the 15 big housing associations in London, made an announcement about a common investment vehicle to raise money to enter the private sector housing market. That is one way in which the solidity of their balance sheets is helping them to raise money for a purpose that should, in the longer term, be self-funding. These are interesting ideas.
The Committee also looked at the housing grant. The so-called grant is sat on the books of housing associations and is counted as a debt. Changing that to a genuine grant or equity could release a lot of funds for investment, and is clearly supported by the housing association movement. We suggested that the Government look at that, because we recognised that there could be problems with overloading some associations in some circumstances with too much debt. Nevertheless, we thought that in principle it was an idea worth considering. We hope Ministers will look at it, because some of the stronger, more robust housing associations might want to pursue it. We have to be cautious, however. What might be right for associations such as the G15 in London, where the private market is buoyant and rents are appropriately high, will not be right in other parts of the country where there is not the same ability to leverage funds. We have to be careful and recognise that a one-size-fits-all solution is not necessarily available.
The Committee looked at the role of local authorities. They have not been great contributors to new house building in recent years, and we ought to change that. We welcome the housing revenue account reforms, because they give local authorities the opportunity to take investment decisions, but why, of all the investments made by local authorities, is housing the only form of investment that is controlled beyond prudential rules? Why is it different? It is a ring-fenced account. It should be in the other direction: it is a safer form of borrowing for authorities. It is not only the Local Government Association, but councils such as Westminster, Kensington and Chelsea and Hammersmith and Fulham that are saying, “Get rid of the artificial cap that has been put on housing revenue account borrowing. Why is it there? Why can we not rely on the prudential rules that are in place for all other forms of local authority borrowing?” Ministers always have fall-back powers under the Local Government Act 2003 if they need them. Why can that not be relaxed to allow more borrowing and building?
Mr Betts
I would be more supportive of the 600,000 figure, but we probably cannot deliver that with the money available. My hon. Friend is absolutely right. She anticipates the “Let’s Get Building” report produced by the National Federation of ALMOs, the LGA and the Chartered Institute of Housing, among others. It makes the point that if the cap was lifted the amount of borrowing local authorities could enter into would rise from £2.8 billion to £7 billion. That would allow the building of 60,000 homes and put a lot of people into work. It just seems to be a simple solution. It does not require the Treasury to go out and find any money to subsidise that borrowing, because it is a ring-fenced account, a trading account, and Ministers need to accept that.
The Committee’s report suggests that some authorities may not want to go ahead, because they do not have a housing need. Why can there not be a swapping or trading of borrowing amounts between local authorities? The Government allow and encourage sharing between local authorities on a whole range of areas, so why not on this too? We raised with them the possibility—we did not say they should definitely do it—of changing Government borrowing rules in respect of the general Government financial deficit. To return to our visit to the Netherlands, the Dutch Government guarantee housing borrowing for housing associations, yet it does not count as Government borrowing. It is a problem in this country that Treasury restrictions weigh heavily on local authority borrowing, particularly in this area.
We welcomed the proposed new models of governance for arm’s length management organisations, which, with more tenant involvement and more co-operative-type structures, could borrow in the private markets, as housing associations do. We also made recommendations concerning the right to buy—about trying to ensure one-for-one replacements and about how the Government could help facilitate that—and giving more freedom to local authorities in terms of discounts in areas of great housing stress and to housing associations that might want to enter the right to buy, where they think it right for their portfolios—that comes back to the point about using portfolios in a way that benefits housing associations. We face the great challenge of moving to a better situation in which we subsidise building, not benefits. That is a long-term problem going back to the 1980s—and even earlier—and the change from subsidising the building of homes to subsidising the high rents of people living in those homes. That is a major challenge for all of us.
George Hollingbery
I am grateful to the hon. Gentleman. He is being very generous with his time. In a discussion on this subject last night, a structural problem in the market was raised: a lot of social housing is leveraged out of market housing, so in a time of much lower market housing production it is more difficult to build social housing. This point was not in his Committee’s report, but does he think that a change is required there?
Mr Betts
There is a problem when market housing is not being built. It is because of the over-reliance on section 106 housing in the past. I know the Government have proposals to encourage, if not force, local authorities to renegotiate the terms of 106 agreements to make market housing more viable. I have reservations about that—it was not something the Select Committee considered in particular—although we recommended that any changes to 106 agreements be left to local discretion. The hon. Gentleman makes a valid point, however, about the comfort of relying on section 106 agreements to provide housing. There are two problems with that: first, when the market collapses, there is not the alternative balance of social housing to replace it in the construction industry, so that element falls at the same time, and secondly social houses are not necessarily needed in exactly the same places as market houses.
Council Tax Benefit Localisation
Debate between Clive Betts and George Hollingbery(11 years, 10 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Clive Betts (Sheffield South East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this important debate. I want to make three points. The first goes back to something that the Communities and Local Government Committee said in October, following the evidence that we took last July. We were against not the principle of the changes but the way in which the Government were going about them. Importantly, we said:
“We recommend that the Government delay the introduction of the new Council Tax support system by a year or more, if consultation with local authorities indicates that this would reduce the risks inherent in introducing many complex changes concurrently.”
That is an important point. Since then, the Local Government Association has repeatedly said that it has concerns with the timetable. In its briefing to us, it said that it urged the Government
“to give councils the necessary time to do this in the most considered, flexible and cost-effective way possible.”
In January, Capita wrote to all the local authorities for which it provides services, saying that it did not think that it could deliver the necessary systems in the time scale. I do not think that that advice has changed. Certainly, when I spoke this morning to Councillor Bryan Lodge, the cabinet member for finance in Sheffield, he said that the advice had not changed. When we had the debate on the Local Government Finance Bill in January, it was interesting that the Minister did not draw attention to that letter from Capita, although he was well aware of it at the time.
What is the situation now? Are the Government saying that despite all the concerns of local councils, the LGA and service providers such as Capita, they believe, in their wisdom, that this can all go ahead on time and without any problems—not just for councils and the administrators, but for the people who receive the benefits at the end of the line?
I just think back to Sheffield in 1999 when we had privatised the housing benefit service and transferred it to Capita in a rushed and botched way. I remember the constituents, often elderly, coming to my surgeries in tears not because they had done anything wrong but because the administration of their benefits was in chaos and, as a result, the arrears on their council tax and rent had risen. They were distraught because they had never been in arrears in their lives. I worry that we will go back to that situation.
The responsibility will be not with local councils but with the Government who will push this through on an unacceptable and unattainable timetable. I say to the Minister that it is not too late to stop. I am talking about not the intention but the ridiculous timetable on which the Government have embarked. If this was simply a question of localism and of saying to local councils, “Do it the way you want,” there would not be a problem.
George Hollingbery
I am a member of the Select Committee and have something to do with the production of its report and the idea behind it. I have always recognised that this is something of a complex area.
Does the hon. Gentleman agree that there are some very real technical complexities in putting this system in place, but there is also an appetite among Ministers for shared systems and projects across large local areas? For example, in Hampshire, there are 16 different district councils, so a shared scheme across the area would make a lot of sense; it would save money in administration and so on. Necessarily, though, it will be a complex system to put in place, with legal agreements that will need to be considered and thought through. A little more time for that might also be very welcome.
Mr Betts
The hon. Gentleman makes a good point; we will get a better scheme for having it slightly later. The savings will be better, as will the service to our constituents.
I say to the Minister that if this was simply a question of saying to local councils, “Get on and devise your own schemes,” they could do it. The problem is that they do not know how to devise a scheme in respect of the advice and detailed regulation that come from Government, because they have not got it yet. It is because the Government are insisting on regulating the details of a localised scheme so closely that they are in these difficulties.
I have two further brief points. One is about the 10% cut. If councils cannot devise their own schemes, they will have to opt for the existing scheme, which means that they will have to find the 10%; £4.5 million in Sheffield on top of the £200 million of cuts that the council is trying to make. That goes for every council in the country—cuts on top of cuts. That is the problem that the Government are forcing on local councils. There is the invidious choice of finding this money from other services, which are already being cut very substantially, or making the cuts in the benefits of people of working age on top of the cuts in benefits and working tax credits that those same families are having to take. It is the cumulative effect on those families that the Government have done no proper analysis of.
Finally, we still do not know from the Government how the administration of the system will work. They are localising council tax benefit and centralising housing benefit. There is a simple arrangement now for people whose income changes: they go down to the local council and speak to someone. In Sheffield, there is the home visiting service for the elderly and disabled, where someone comes along and helps them sort out both benefits. Now we will have a council tax benefit that we go to the council for and a housing benefit that we will have to go online for—or on a telephone to someone in Jobcentre Plus. For elderly people, that will be an impossible arrangement.
The Government say they will talk to local councils to find a way forward. As I understand it, there is no clear idea from the Government about how these two complex benefits will be arranged in the future when we will have two completely separate systems that people have to go through to get their problems sorted out.
Local Government Finance Bill
Debate between Clive Betts and George Hollingbery(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Betts
What the Government are doing is twofold, because two problems are being exacerbated by the set-aside. By limiting the amount of money in the local government system, they are reducing not only the incentives for councils but their own ability to do some redistribution. If they did not use the set-aside and allowed more money to remain in the local government system, they might be able to resolve the conflict caused by their attempt to do two things with one tax. The less tax that they have in the system and the more restrictions they impose, the more that conflict will come into play—the conflict between the retention of money to encourage investment and more growth, and the need for redistribution and the mechanism enabling it to take place.
George Hollingbery
I thank the hon. Gentleman for giving way. He is being extremely generous with his time.
A number of Members have pointed out, both today and on Second Reading, that there is a relatively limited amount that local government can do to encourage business growth. It occurs to me, from a more philosophical viewpoint, that economic growth can be a public good, and that Government investment elsewhere in the economy can allow that growth to go ahead. Is it therefore entirely unreasonable for central Government to keep some of that business rate growth?
Communities and Local Government (CSR)
Debate between Clive Betts and George Hollingbery(13 years, 3 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Clive Betts (Sheffield South East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Robertson. I am introducing the debate as the Chairman of the Communities and Local Government Committee, and I shall draw heavily on the evidence session that the Select Committee had with the Secretary of State; the Minister of State, the right hon. Member for Tunbridge Wells (Greg Clark); and the Minister for Housing and Local Government on 21 December 2010. I shall try to do so objectively, and I am sure that other members of the Select Committee who are here will do the same. However, we all have to wear our political hats as well, so my interpretation might be slightly different from that of some of my colleagues.
Other members of the Select Committee, particularly from the Labour side, wished to be here, but I am sure we are all aware that two of them have constituencies adjacent to one where a by-election is taking place today. I do not know whether the rumours are true, but perhaps the major Government party has not been quite as enthusiastic about fighting the by-election as some other parties have been.
I thought for an awful minute that the Minister might be late. I thought that he might have been detained in last-minute urgent discussions with the Treasury, and that he would come here and announce a little bit of improvement on the settlement. We would have had even more to discuss in terms of helping local government through what will be a difficult period.
I do not want to get bogged down in the Government’s overall policy on deficit reduction. The Secretary of State mentioned it in the evidence session, and said that everything had to be seen in that context, which was a fair point to make. I might make a different point about the depth of the attempts at deficit reduction and the speed at which the Government are going about it, but that is not our job here today; it is to look at the impact on local government and local services.
Nevertheless, it has to be said that if the impact of the scale and speed of deficit reduction is that the economy stalls and unemployment rises, it could lead to increased repossessions, increased rent arrears, pressure on housing services and housing and benefits advice, increased social tensions in communities, and an increase in crime. All those, of course, have an impact on local government: they increase the demand for local government services and increase the need to spend money at local government level and to switch it away from other important and essential services that local government carries out. I shall say no more about that.
Yes, all right, the Government have embarked on a significant deficit reduction programme which means, in effect, cuts to public expenditure. The average cut among Whitehall Departments will be 19% over the four years. I shall raise several matters which I hope the Minister can come back on. The first is that we have not had an explanation as to why the Department for Communities and Local Government seems to have been ready to offer itself up for the largest cut of all. The central Department’s spending will go down by 68% in real terms over the four-year period.
The Government are saying that that is all right because many of the functions that the Department carries out will be passed down to local authorities—the brand of localism is at the heart of what they are saying. On the other hand, the Localism Bill, which will come to the Floor of the House on Monday, includes a great deal of work for the Department at the centre to do. It provides some 150 order-making powers that Ministers and civil servants will be involved in administering. I have concerns about the effectiveness of future work in the Department, given the scale of the cuts.
George Hollingbery (Meon Valley) (Con)
As a matter of correction, I seem to recall from the evidence that the Secretary of State offered that the headline figure for the cuts in the central Department was 68%, but that if one took account of large amounts of direct spending that will be transferred from the Department to local government—not just administration but actual spending—the reduction is actually 33%, exactly equivalent to the Treasury cuts.
Mr Betts
That is still a big figure. It might be helpful to take this a stage further. Perhaps we could have at some point a note from Ministers to identify precisely where the difference between the 33% and the 68% actually goes in being passed down, because local authorities have not been claiming that they are seeing the benefit of an extra 35% in their budgets.
Mr Betts
It is a difficult issue. The Minister will say, “Look at all the reserves in local government. They can help mitigate the cuts to services.” They can, but reserves run out; they are spent once and cannot be spent again. During ongoing reductions in spending, reserves can help a council through a problem, but they will not permanently deal with it. Furthermore, reserves are not equally distributed and often they are found in authorities that have made housing stock transfers and have a big dollop of money from that. Some of the reserves cited come from schools and are held at the centre by local authorities, some are housing revenue account reserves with a specific use, and some are needed for the cash-flow issues that councils face on a day-to-day basis. The reserves may help during the first year, but they are not a permanent solution to the cuts.
We know that capital spending on housing will be cut by half in the spending round. We have not been building enough social housing—or enough housing as a whole—in this country, and we can argue on another day about whether the proposals for the new homes bonus and the planning changes will help or hinder that. The Communities and Local Government Committee will produce a report on that issue in due course. Nevertheless, spending will be halved and after the existing commitments to build houses at current rent levels are met, there will be no central Government funding for houses other than those with rents that are linked to market rents—that does not necessarily mean 80% of market rent, but means rents that are linked to the market in some form. Those higher rents will help provide money to build new homes in the future. However, 150,000 new homes will not deal with the waiting list, and of those, any new starts will not have rent levels that many people can afford. That is the real problem.
The decent homes funding is also going to be cut. From the figures provided by the Minister, I calculate that the amount of money for decent homes over the next four years will be just over £1 billion, and the backlog of work still outstanding is around £4 billion. Therefore, it will be about 10 years—probably longer—before all council homes in the country are brought up to a decent standard. That is an awfully long time for people to wait.
George Hollingbery
Will the hon. Gentleman acknowledge the plans for flexible tenancies? They will allow more social homes to be recycled through the market place on the basis of need, rather than having homes allocated for 20, 30 or sometimes 40 years, to people who may not need them. Does he acknowledge the enormous pool of assets in the social housing stock, particularly in housing associations? Those could be leveraged in the market place more effectively than presently happens. Would he approve of that?
Mr Betts
There is a role for different approaches to the provision of housing such as intermediate market rents, more private institutional investment in housing, or links between housing associations and private institutional investors. Those ideas are interesting, and I would welcome them if we were building social houses at existing rent levels at the same time. My concern is that the Government are withdrawing from that. The other ideas are interesting, and in some cases exciting. I support those ideas, but not to the exclusion of money for social housing or of funds to get all homes to a decent standard. I am worried about that, and my overall concern is that we are approaching a housing crisis. Levels of homelessness will rise as unemployment increases. It is not only a matter of Government funding being cut; it is about mortgage availability. With increased deposit levels, young people are not able to get on the housing ladder at present.
Local Government Financing
Debate between Clive Betts and George Hollingbery
Mr Betts
Obviously it would be up to the Government to make any such announcement, but the idea that people should move from communities in the north, where there may be enough housing, to find jobs in the south, where there is a particularly chronic housing shortage, beggars belief. What would people on waiting lists in the south think of someone who arrived there and said, “I will have that house as a matter of priority, because I am moving down here to work”? The policy has not been thought through.
If any Member on the other side of the House can tell me where the mechanism and the funds will come from to enable new social rented housing to be built, I ask him or her to stand up and do so. So far, I have heard nothing from either the Conservatives or the Liberal Democrats. There are no funds for council house building—they have been stalled—and the funds for housing association building are limited. Given the reduction in cross-subsidy from the selling of homes, any money that the Homes and Communities Agency may have to fund housing association accommodation will produce fewer houses. Fewer social houses will be built as a result of this Government’s policies, and I am aware of no commitment from Ministers to rectify the position.
What will the Government do about the overall funding situation? We have heard about 25% cuts, and also about protection for education. Presumably Departments other than those dealing with schools and defence will take a bigger hit. We are assuming that councils will receive at least 30%, but the arrangement is not fair, because we will have to protect adult social services and children’s services. What is left? Libraries, parks, recreation, street cleaning, the environment and refuse collection. It is no use the Secretary of State telling local authorities how to collect their refuse. Will they have the money to pay for one refuse collection a week?
Then we must consider the differing impacts on various councils. I opposed individual council tax caps when our Government introduced them, and refused to vote for them, but let us assume that they are imposed now. At least authorities will receive the same amount of money from council tax, but there will be cuts in their Government grant. Councils with the most deprivation in their areas receive a bigger amount of grant than those with the least deprivation, which receive more of their money from council tax. Council tax is to be frozen but Government grant is to be cut by 25%, which means that the councils that will suffer the biggest cuts in their overall budgets are those with the most deprivation. That is unfair, and we fundamentally oppose it. The Liberal Democrats used to oppose it as well, and it is time that one or two Members on the Government Benches, including the Minister, started to explain how they will make the system fair.
The fact is that the most disadvantaged councils and communities will be hit hardest by the 25% cuts in Government funding. In their areas, library, recreation and street cleaning budgets will be cut in half. If the Minister does not agree with that, he must explain why my figures are wrong. If such facilities as adults’ and children’s services are protected from the 30% cut in the grant, the impact on other services will be dramatic, especially in areas that receive a large amount of Government support because of deprivation.
George Hollingbery
I look forward to working with the hon. Gentleman on the Select Committee. It seems from his eloquent speech this afternoon that I have a great deal to learn. I have to say, however, that I am a little tired of Opposition Members targeting the “Tory shires”, as if that were a pejorative term. We rightly receive less Government support for our citizens than more deprived boroughs, and I accept and understand that. However, the spending that comes to us is for our more deprived citizens, and cuts to our budgets, which have not been topped up as much over recent years as those in others places, are very important to us. We may be wealthier parts of the country, but the people we are looking after are not.
Mr Betts
In the end, the Government grant reflects the amount of deprivation in an area. Clearly, there are deprived people even in affluent areas, but it is about the total amount of deprivation. Certainly other communities have more deprivation and that is why they get more Government funding and they will be harder hit. That is the point that I am making.
Right at the end of the Minister’s speech we got a vague mention of Total Place. It is important that it is developed, but it should not be seen as a panacea. Total Place is at the pilot stage; it has produced some very interesting results and ideas about how public money can be spent better across Departments. The Government have to allow local authorities to take the lead on these matters. The DCLG must get a grip of its colleagues in other Departments and let go of the controls that exist, but that will not deliver overnight savings of 25%. We will not achieve 25% or 30% cuts by efficiency savings; there will be real damage to public services. We must recognise that, and the Government must explain and justify the cuts.
The Secretary of State says that his three priorities are localism, localism and localism, but let us take what the Minister said about refuse collection and people in town halls dictating things. Where is the dictation? The Secretary of State in his new spirit of localism is telling every council in this country how it must empty the bins. It is absolute nonsense. How can we have any trust or faith in a Government who talk about localism and setting local councils free when that is one of their first policy announcements?
It is clear that the Budget package was regressive. That has been shown by the Institute for Fiscal Studies. There was an interesting report in the newspapers at the weekend of an investigation into the totality of the Government cuts by Tim Horton and Howard Reed on behalf of the Fabian society. It showed that when one takes not merely the tax changes but the housing benefit changes and the spending cuts, including local government spending cuts, the poorest 10% of our community will have their spending power cut by six times as much as the richest 10%. That is the impact of the Government’s policy. The Budget was not fair and the cuts that have been made so far to local council budgets are not fair. The deficit is truly being cut on the backs of the poorest in our communities.